Palmer, who recently became the first African-American and youngest actress to star in Broadway's "Cinderella", joins Julianne Hough and Vanessa Hudgens who were earlier cast as Sandy and Rizzo respectively, reported Aceshowbiz.
The 1971 musical was turned into a 1978 film, starring John Travolta and Olivia Newton-John.
Marc Platt will executive produce the live TV production, with Thomas Kail as the director overseeing the stage direction and Alex Rudzinski as the live TV director.
It is set to go on air in January 2016.
